CUSTOMERS of Liffe have spurned the futures exchange's new electronic system and are persevering with the traditional open outcry method of trading.

Users of the exchange say that Connect has only managed to capture about a quarter of the short sterling market, the product that enables participants to bet on the direction of UK interest rates. They argue that the system is unsuited to trading products like short sterling and are preferring to use the tried and tested open outcry system, where traders stand shoulder to shoulder in so-called pits.

The head of one big Liffe customer said: "My belief is that screen-based systems will give us a less liquid, more volatile market. Volumes have been pretty low, and after the last interest rate rise it was almost impossible to get a price on Connect."

Although some banks, such as Barclays, have helped to nurture Connect, others have continued to support the open-outcry pits in the belief that they provide the best service for their customers.

The failure of Connect to capture the short sterling market comes a day before it starts trading Euribor, the arena for bets on European interest rates. Observers believe it is vital that Liffe retains control of the Euribor and short sterling markets to beat the competition of Eurex, the fully automated German exchange that has taken much of Liffe's business in the last few years.

Liffe is thought to have called a series of meetings with local traders, who gamble their own money on the exchange, to encourage them to switch to the new systems. Some locals say they have been offered as much as pounds 25,000 to use the screens, but Liffe denies any such inducements have been made.

Most locals believe their livelihood depends on the survival of the pits. They accuse the exchange of being determined to close the pits regardless; a move that could cause hundreds more job losses.

Locals have claimed consistently that, given the cost of introducing Connect, Liffe chairman Brian Williamson has already made up his mind that it is too expensive to keep the exchange's few remaining pits open as well. However, the exchange insists that the pits will stay open as long as member choose to conduct a significant amount of their business through them.

Many locals have already left the exchange's floor to trade on the screens, but most have found it much harder to make money. The 30 or so who remain have fought a fierce rearguard action in defence of open outcry - a career which has provided a very lucrative livelihood for many of them.